GB - Graham v Every & Ors

Judgment

LADY JUSTICE ARDEN:

Summary of the issues on this appeal and my conclusions

This is an appeal by Mr Jason Lorimer Graham, the petitioner in these proceedings, and a cross-appeal by Mr Simon Every, Mr Frederick Olsson, Mr Alexander De Pommes, Mr Nigel Carande and Mr David Rymer, the individual respondents in the petition, against the order dated 18 January 2013 of Mr Stuart Isaacs QC, sitting as a deputy judge of the Chancery Division allowing (in part) the individual respondents’ application to strike out the petition. The parties are the present or former shareholders in Below Zero London Ltd (“the Company”), which carries on the business of owning and operating an “ice bar” (that is, a bar where the furniture, walls and glasses are made from ice), and a restaurant. Originally, some of the parties were directors of the Company but Mr Graham was removed as director in 2009.

Following his removal, Mr Graham presented a petition for relief from unfair prejudice under section 994 of the Companies Act 2006. This provision is very well known and I need only set out sub-section (1):

“ (1) A member of a company may apply to the court by petition for an order under this Part on the ground—(a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. ”

Mr Graham’s petition contains allegations relevant to this appeal as follows:

the “understanding” allegation: that the Company had been formed on the basis of a common understanding between the parties, recorded in part in written Heads of Agreement of April 2005;

the “fitting out” allegation: that Mr Every and Mr De Pommes had failed to manage the cost of the fitting out of the Company’s business premises by Willowmead Ltd (“W Ltd”) and another company, Straight Impact Ltd (“S Ltd”), also associated with Mr Every, Mr Rymer and Mr Carande;

the “exclusion” allegation: that Mr Graham was excluded from the management of the Company;

the “loan agreements” allegation: that the respondents caused the Company to enter into "extortionate loan agreements" under which the Company borrowed money from W Ltd for the benefit of certain directors;

the “non-compliant share purchase” allegation: that Mr Every bought the shareholdings of